Compensation for cut in question
BILLY WONG WAI-YUK
The two municipal councils asked last night how the Financial Secretary will compensate them for income lost due to the rate cut.
Mr Tsang announced a one-off concession of a 50 per cent cut in rates for the July-September quarter.
'Members of the public only have to pay 3.5 quarters' rates instead of four in the 1999-2000 fiscal year,' he said.
The cut will reduce government revenue by $1.8 billion.
Mr Tsang said rates were the taxes with the widest impact on the community and one of the most reliable sources of revenue.
Rating and Valuation Department figures show there are about two million domestic and almost 350,000 commercial and industrial tenants paying rates.
'Within the very tight fiscal constraints I am facing I have tried to find room to further relieve the burden of ratepayers,' he said.
Mr Tsang increased the rates percentage charge from 4.5 per cent to five per cent in the current financial year. It had dropped to 4.5 per cent in the previous budget.
But ratepayers in about 80 per cent of properties will pay less than in the past financial year. Rateable values are calculated on rent levels, which have dropped during the economic downturn.
The Government will conduct a general revaluation of the rateable values of properties every year, instead of every three years.
'This ensures that rateable values will better reflect prevailing market rentals,' Mr Tsang said.
'It will be fairer to ratepayers and will reduce unnecessary disputes between the public and the Rating and Valuation Department.' Spokesmen for the provisional Urban Council and provisional Regional Council urged Mr Tsang to clarify the policy as soon as possible. More than 80 per cent of their income comes from rates.
Mr Tsang admitted the concession would have a significant impact on the municipal councils.
He said special arrangements would be made, but did not elaborate.
The Real Estate Developers Association welcomed the decision to conduct annual revaluation.
But the association criticised the policy to charge rates for about 40,000 empty flats.